|By PR Newswire||
|December 6, 2012 08:00 AM EST||
NEW YORK, Dec. 6, 2012 /PRNewswire/ -- Ongoing access to capital and financing, strengthened balance sheets and divestiture activity will continue to fuel deal activity in 2013, according to PwC US. An acceleration of deals taking place during the final months of 2012 may result in a lull in activity during the first quarter; however, these sound deal fundamentals are creating optimism that the balance of 2013 will be a stronger year for U.S. mergers and acquisitions (M&A). According to PwC's U.S. M&A outlook, dealmakers remain hyper vigilant on diligence during the M&A decision making process, analyzing each outcome and the various impacts on investment and return scenarios to achieve certainty of deal success.
"The fundamentals for sustained M&A activity in 2013 are solid, with improving corporate confidence, increasing private equity activity from both a buy and sell side perspective, and relatively healthy debt markets. There remains strong competition for quality assets as both corporates and private equity continue to seek out deals to fuel their growth and deploy capital," said Martyn Curragh, PwC's U.S. Deals Leader. "We've been supporting a range of buyers and sellers across a broad spectrum of industries, helping them raise capital through high yield offerings and providing diligence and valuation analyses for potential deals. Dealmakers have been very cautious and disciplined in evaluating transactions. They are placing a premium on a thorough analysis of potential risks and exposures and are seeking to ensure there is broad functional support to successfully manage deal execution and reduce the risk of value leakage."
With capital ready to be deployed, along with the increasing availability of financing, PwC expects companies and financial sponsors to use M&A to enhance their growth prospects in the new year. Corporate cash levels remain steady at $1.1 trillion for the S&P 500, indicating continued opportunity for companies to put their capital to work through M&A. In the eleven months ending November 2012, there were a total of 7,585 transactions representing $705 billion in disclosed deal value. In October alone, deal value spiked to a 14 month high, reaching $96 billion and with 754 deals, October was the most active month since August 2011. In terms of deal size -- and with the absence of "transformative" mega deals -- middle market deals have been the "silver lining" for deal activity, accounting for 98 percent through November in 2012. PwC expects this trend in middle market deals to continue in 2013.
"Both corporate and private equity players are thinking about transactions to expand market share, build brands and fuel their long term strategic plans. In today's environment, companies must be agile to act with discipline, speed, and unbiased thoroughness to execute when a good potential acquisition comes to market," said John Potter, Deals partner at PwC. "A recent poll during our M&A integration webcast found that 89 percent of executives expect to see similar or increased M&A activity over the next year, with 45 percent expected to plan a deal within the next six months. Deal making, whether by acquisition or divestiture, is very much at the top of the agenda for those pursuing new growth opportunities in 2013."
In light of available cash and growth strategies, a desire to get deals done has heightened the competition among corporate and private equity buyers. According to PwC, more bidders are taking a longer look at a given target over the past 12 months.
Divestitures accounted for 43 percent of total disclosed deal value and 30 percent of deals overall, the highest level since 2005, and should remain a key driver for deal making in the year ahead as companies seek to unlock value in assets. Those that are currently looking to divest assets have stepped up the sell side diligence process to showcase potential value for quality assets for potential buyers.
"Successful divestitures in today's marketplace require a sharp focus and rationale around the opportunities that an asset has to grow. An accurate portrayal of long-term deal value for an asset helps ensure that a buyer and a seller can meet at a reasonable price and unlock value and opportunity for the future of both companies involved in the deal," according to Ron Chopoorian, PwC's U.S. Divestitures Leader. "With preparedness and rigor around the sell side process serving as essential components for successful divestitures, we are seeing auctions become broader and participants 'staying in play' for longer periods of time."
With a total of 1,334 transactions and $128 billion in value, private equity deals accounted for 18 percent of total deal value, indicating that while corporates continue to drive overall activity, private equity's involvement in the marketplace remains very active. With roughly $1trillion in dry powder waiting to be deployed, sophisticated private equity buyers are scenario planning for every deal outcome to generate the best returns for their investments.
According to PwC, private equity continues to prepare for multiple exit options, including refinancing debt, recapitalizations, IPOs and sales to strategic buyers to take advantage of shifting windows of opportunity. On the buy side, private equity remains a very active deal participant, especially in the middle market and with divested corporate assets. The increased availability of high yield debt is a main driver fueling private equity activity in the U.S. marketplace.
With creditors' thirst for higher yields, financing for transactions remains attractive for financial sponsors to pursue new deals and monetize existing investments. While the market remains extremely competitive for high yield offerings, businesses raising capital should be thoroughly prepared and have the infrastructure in place to address the needs of their public investors. According to PwC, proper preparation for debt financing transactions enables a business to communicate a compelling story and address creditor inquiries in a timely fashion. This debt preparedness helps add increased certainty to a deal for sellers, and guide buyers through an accelerated time table to complete a transaction.
Notable sectors that continue to present opportunities include:
Oil & Gas -- Both volume and value levels are close to 2011 levels with an increase in mega deals led by private equity funds that have increased their investment and exposure to the energy industry. PwC expects deal activity to increase in 2013, with ongoing consolidation in the shale plays very likely. Large international oil companies are expected to continue to increase their positions in the unconventional plays in North America. Private equity will likely continue to invest heavily in the energy space -- both upstream and midstream. Foreign buyers may increase activity in 2013 looking to corporate transactions to help them increase inventory of projects as well as the size and quality of their management teams. According to PwC, the likelihood of more energy related mega deals in 2013 is certainly higher.
Financial Services -- Deal activity remains steady compared to 2011 in terms of announced deals. Despite receding asset quality and valuation concerns across the industry, the prolonged period of implementation of new regulatory standards has created additional impediments to deals. Going forward, both domestic and global financial institutions continue to seek divestiture of non-strategic operations in seeking to further bolster capital levels and unlock asset value. At the same time, as organic loan growth has slowed, many banks will look to acquire asset-generating businesses. PwC expects valuation gaps will narrow which, coupled with resolution of regulatory uncertainty, will likely drive increased deal volume in the coming year. While there has been limited private equity activity within the insurance and banking sectors, there has been an increase in private equity deal activity within the asset management sector, a trend PwC expects to continue in 2013.
Healthcare & Pharmaceuticals -- Throughout 2012, health industries M&A activity was hindered by the uncertainty of the presidential election. Now with a near-certain implementation of the Affordable Care Act (ACA) and its sweeping reforms impacting business models, PwC expects 2013 to be a banner year for M&A activity across health industries. For healthcare providers, this momentum will be buoyed by economic pressure to accept lower reimbursement rates and as this pressure mounts, margin compression on single-site or inefficient operators will force divestiture or partnering strategies. Consistent with the last few years, continued acceleration of deals involving financially struggling providers seeking lifelines from larger, healthier systems is likely to continue. In addition to provider-to-provider deals, 2013 may see the trend of providers partnering or merging with payers continue. For payers, no deals are more prevalent than the large health insurers positioning for the impact of the insurance exchanges and increased Medicare and Medicaid enrollments. And while high-profile, high-value deals of this nature may be less frequent in 2013, PwC expects health insurers to continue seeking enrolment expansion through M&A during 2013. In the pharmaceutical industry, large companies continue to reshuffle their businesses portfolios and seek new avenues for growth in emerging markets. Key players in pharma continue to experiment with new business models involving non-pharma categories, joint ventures or divestitures as a means to unlock shareholder value. Consolidation remains active among specialty pharma and personalized medicine companies, while medical device companies explore the need to gain scale in the U.S. and abroad.
Technology -- While technology deal volume trended lower in 2012, deal value exceeded 2011 through the third quarter -- momentum which began in the final three months of 2011 with large mega deals contributing to a record quarter for deal value. Despite higher overall values through September 2012, PwC expects a slight reduction in full year acquisition value among technology companies due in part to the global macroeconomic environment. However, PwC sees a silver lining in very early signs of growing activity among large technology companies to re-evaluate their product and business portfolios and initiate divestitures. According to PwC, there are multiple drivers for future M&A activity in the sector including changes in enterprise customers' demand towards cloud technology services, continuing high growth in social and mobile sectors and a favorable appetite among technology oriented private equity funds for slower growing but cash flow producing assets.
Note to editors: A snapshot of PwC's data for U.S. M&A activity is available upon request. The M&A figures captured in PwC's M&A outlook is a compilation of data from Thomson Reuters with analysis by PwC. This data is an aggregate of deal activity from around the world and includes multiple sources to confirm deal occurrence and respective characteristics. U.S. deals are defined as all deals done by U.S. acquirers including U.S. outbound investments. Deal value is defined as the target company's ranking value including net debt. A divestiture is defined as the partial or full disposition of an asset or investment (e.g. carve-out, asset sale, etc.). Middle market deals are defined as deals with a value of $1 billion or less.
For further insight on the outlook for the M&A landscape in 2013, join PwC's Deals webcast on Tuesday, December 18th at 1:00 p.m. E.T. To register, visit: www.meetpwc.com/MandAoutlook2013.
PwC's Deals practitioners help corporate and private equity executives navigate transactions to increase value and returns. In today's increasingly daunting economic and regulatory environment, our experienced M&A specialists assist clients on a range of transactions from smaller and mid-sized deals to the most complex transactions, including domestic and cross-border acquisitions, divestitures and spin-offs, capital events such as IPOs and debt offerings, and bankruptcies and other business reorganizations. We help clients with strategic planning around their growth and investment agendas and advise on business-wide risks and value drivers in their transactions for more empowered negotiations, decision-making and execution. We help clients expedite their deals, reduce their risks, capture and deliver value to their stakeholders and quickly return to business as usual. Our local and global deal strength is derived from over 1,400 deal professionals in 21 cities in the U.S. and over 9,800 deal professionals across a global network of firms in 75 countries. In addition, our network firm PwC Corporate Finance provides investment banking services within the U.S. For more information, visit www.pwc.com/us/deals.
About the PwC Network
PwC firms help organizations and individuals create the value they're looking for. We're a network of firms in 158 countries with more than 180,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.
© 2012 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.
This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
In his session at Cloud Expo, Robert Cohen, an economist and senior fellow at the Economic Strategy Institute, will provide economic scenarios that describe how the rapid adoption of software-defined everything including cloud services, SDDC and open networking will change GDP, industry growth, productivity and jobs. This session will also include a drill down for several industries such as finance, social media, cloud service providers and pharmaceuticals.
Oct. 28, 2016 12:00 AM EDT Reads: 2,152
Enterprises have been using both Big Data and virtualization for years. Until recently, however, most enterprises have not combined the two. Big Data's demands for higher levels of performance, the ability to control quality-of-service (QoS), and the ability to adhere to SLAs have kept it on bare metal, apart from the modern data center cloud. With recent technology innovations, we've seen the advantages of bare metal erode to such a degree that the enhanced flexibility and reduced costs that cl...
Oct. 28, 2016 12:00 AM EDT Reads: 626
SYS-CON Events announced today that Niagara Networks will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Niagara Networks offers the highest port-density systems, and the most complete Next-Generation Network Visibility systems including Network Packet Brokers, Bypass Switches, and Network TAPs.
Oct. 28, 2016 12:00 AM EDT Reads: 1,449
In today's uber-connected, consumer-centric, cloud-enabled, insights-driven, multi-device, global world, the focus of solutions has shifted from the product that is sold to the person who is buying the product or service. Enterprises have rebranded their business around the consumers of their products. The buyer is the person and the focus is not on the offering. The person is connected through multiple devices, wearables, at home, on the road, and in multiple locations, sometimes simultaneously...
Oct. 27, 2016 10:30 PM EDT Reads: 3,834
Everyone knows that truly innovative companies learn as they go along, pushing boundaries in response to market changes and demands. What's more of a mystery is how to balance innovation on a fresh platform built from scratch with the legacy tech stack, product suite and customers that continue to serve as the business' foundation. In his General Session at 19th Cloud Expo, Michael Chambliss, Head of Engineering at ReadyTalk, will discuss why and how ReadyTalk diverted from healthy revenue an...
Oct. 27, 2016 10:30 PM EDT Reads: 3,082
SYS-CON Events announced today that Transparent Cloud Computing (T-Cloud) Consortium will exhibit at the 19th International Cloud Expo®, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. The Transparent Cloud Computing Consortium (T-Cloud Consortium) will conduct research activities into changes in the computing model as a result of collaboration between "device" and "cloud" and the creation of new value and markets through organic data proces...
Oct. 27, 2016 10:30 PM EDT Reads: 1,508
SYS-CON Media announced today that @WebRTCSummit Blog, the largest WebRTC resource in the world, has been launched. @WebRTCSummit Blog offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. @WebRTCSummit Blog can be bookmarked ▸ Here @WebRTCSummit conference site can be bookmarked ▸ Here
Oct. 27, 2016 10:30 PM EDT Reads: 9,800
Intelligent machines are here. Robots, self-driving cars, drones, bots and many IoT devices are becoming smarter with Machine Learning. In her session at @ThingsExpo, Sudha Jamthe, CEO of IoTDisruptions.com, will discuss the next wave of business disruption at the junction of IoT and AI, impacting many industries and set to change our lives, work and world as we know it.
Oct. 27, 2016 10:30 PM EDT Reads: 541
Established in 1998, Calsoft is a leading software product engineering Services Company specializing in Storage, Networking, Virtualization and Cloud business verticals. Calsoft provides End-to-End Product Development, Quality Assurance Sustenance, Solution Engineering and Professional Services expertise to assist customers in achieving their product development and business goals. The company's deep domain knowledge of Storage, Virtualization, Networking and Cloud verticals helps in delivering ...
Oct. 27, 2016 10:15 PM EDT Reads: 1,162
In the 21st century, security on the Internet has become one of the most important issues. We hear more and more about cyber-attacks on the websites of large corporations, banks and even small businesses. When online we’re concerned not only for our own safety but also our privacy. We have to know that hackers usually start their preparation by investigating the private information of admins – the habits, interests, visited websites and so on. On the other hand, our own security is in danger bec...
Oct. 27, 2016 10:15 PM EDT Reads: 677
SYS-CON Events announced today that Hitrons Solutions will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Hitrons Solutions Inc. is distributor in the North American market for unique products and services of small and medium-size businesses, including cloud services and solutions, SEO marketing platforms, and mobile applications.
Oct. 27, 2016 10:00 PM EDT Reads: 2,110
OnProcess Technology has announced it will be a featured speaker at @ThingsExpo, taking place November 1 - 3, 2016, in Santa Clara, California. Dan Gettens, OnProcess’ Chief Analytics Officer, will discuss how Internet of Things (IoT) data can be leveraged to predict product failures, improve uptime and slash costly inventory stock. @ThingsExpo is an annual gathering of IoT and cloud developers, practitioners and thought-leaders who exchange ideas and insights on topics ranging from Big Data in...
Oct. 27, 2016 09:45 PM EDT Reads: 538
As companies adopt the cloud-to-streamline workflow, deployment hasn’t been very seamless because of IT concerns surrounding security risks. The cloud offers many benefits, but protecting and securing information can be tricky across multiple cloud providers and remains IT’s overall responsibility. In his session at 19th Cloud Expo, Simon Bain, CEO of SearchYourCloud, will address security compliance issues associated with cloud applications and how document-level encryption is critical for sup...
Oct. 27, 2016 09:15 PM EDT Reads: 374
More and more companies are looking to microservices as an architectural pattern for breaking apart applications into more manageable pieces so that agile teams can deliver new features quicker and more effectively. What this pattern has done more than anything to date is spark organizational transformations, setting the foundation for future application development. In practice, however, there are a number of considerations to make that go beyond simply “build, ship, and run,” which changes ho...
Oct. 27, 2016 09:00 PM EDT Reads: 3,703
SYS-CON Events announced today that Impiger Technologies will exhibit in Booth #109 at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Impiger Technologies is a world-class, enterprise software product engineering company specializing in Mobile Application Development, Cloud Applications, Microsoft Technology Solutions, Web Technology and Telecom Services. Impiger Technologies helps enterprises improve busi...
Oct. 27, 2016 08:45 PM EDT Reads: 319
SYS-CON Events announced today that Enzu will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Enzu’s mission is to be the leading provider of enterprise cloud solutions worldwide. Enzu enables online businesses to use its IT infrastructure to their competitive advantage. By offering a suite of proven hosting and management services, Enzu wants companies to focus on the core of their online busine...
Oct. 27, 2016 07:45 PM EDT Reads: 1,463
The explosion of new web/cloud/IoT-based applications and the data they generate are transforming our world right before our eyes. In this rush to adopt these new technologies, organizations are often ignoring fundamental questions concerning who owns the data and failing to ask for permission to conduct invasive surveillance of their customers. Organizations that are not transparent about how their systems gather data telemetry without offering shared data ownership risk product rejection, regu...
Oct. 27, 2016 07:15 PM EDT Reads: 316
November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Penta Security is a leading vendor for data security solutions, including its encryption solution, D’Amo. By using FPE technology, D’Amo allows for the implementation of encryption technology to sensitive data fields without modification to schema in the database environment. With businesses having their data become increasingly more complicated in their mission-critical applications (such as ERP, CRM, HRM), continued ...
Oct. 27, 2016 05:45 PM EDT Reads: 1,192
SYS-CON Events announced today that Embotics, the cloud automation company, will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Embotics is the cloud automation company for IT organizations and service providers that need to improve provisioning or enable self-service capabilities. With a relentless focus on delivering a premier user experience and unmatched customer support, Embotics is the fas...
Oct. 27, 2016 05:00 PM EDT Reads: 1,069
SYS-CON Events announced today that Cloudbric, a leading website security provider, will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Cloudbric is an elite full service website protection solution specifically designed for IT novices, entrepreneurs, and small and medium businesses. First launched in 2015, Cloudbric is based on the enterprise level Web Application Firewall by Penta Security Sys...
Oct. 27, 2016 04:30 PM EDT Reads: 1,346